Assume that your stock of sales merchandise is maintained based on the forecast
ID: 450509 • Letter: A
Question
Assume that your stock of sales merchandise is maintained based on the forecast demand. If the distributor's sales personnel call on the first day of each month, compute your forecast sales by each of the three methods requested here.
Using a simple three-month moving average, what is the forecast for September? (Round your answer to 2 decimal places.)
Using a weighted moving average, what is the forecast for September with weights of 0.40, 0.50, and 0.10 for June, July, and August, respectively? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Using single exponential smoothing and assuming that the forecast for June had been 144, forecast sales for September with a smoothing constant alpha of 0.20. (Round your answer to 2 decimal places.)
Assume that your stock of sales merchandise is maintained based on the forecast demand. If the distributor's sales personnel call on the first day of each month, compute your forecast sales by each of the three methods requested here.
Explanation / Answer
a. ) Simple moving average for 3 months = (Sum of forecast demand for 3 months / 3)
=(155+194+220)/3= 569/3 = 189.67. So forecast for September = 189.67
b.)Weighted Moving Average
Weightage for June : = 0.4, July=0.5, Aug=0.1.
Werighted Moving Average = (Sum of Demand of month *Weightage/Weightage)
=(155*0.4 +194*0.5+220*0.1)/(0.4+0.5+0.1)=(62+97+22)/1= 181
So september forceast =181
c.) Forecast for June =144
Alpha= 0.20 ( constant)
Ft+1 = (1-)Ft+ (At) where Ft= Forecast demand, At= Actual demand
Forecast for July = (1-0.2)*144+0.2*155 = 146.2
Forecast for Aug= (1-0.2)*146.2+0.2*194=155.76
Forecast for Sep = (1-0.2)*155.76+0.2*220=168.61